Special retirement supplement

Q. Because of medical reasons, I’m considering retiring early. My age is 58, and I have 28 years of federal employment, non-military. I know that I will deduct 5 percent for every year until I reach 60 for my pension. Would I receive the special retirement supplement if I retire now? I have reached my minimum retirement age.

A. No, you wouldn’t. No one who retires under the MRA+10 provision (minimum retirement age with at least 10 years of service) is eligible for the special retirement supplement.

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And to add to that response, the age reduction that would be applied if you retire at age 58 with 28 years of service is 5% per year for each year you are under age 62 not age 60, a permanently penalty for life.

Based on your info, you will not be eligible to receive the SRS till you reach age 60, when only 20 years of credible Federal civil service is needed (includes military buyback time) to retire on immediate FERS annuity without penalties. Between your MRA and age 60, you need 30 years credible Federal civil service (includes military buyback time) to be able to retire on an immediate FERS annuity without penalties.

Only those FERS retirees who are under age 62 and retired without penalties is eligible to receive the SRS. Also, eligibility for the SRS expires at age 62, when you are eligible for early SS, regardless of whether you apply for early SS when you turn 62 or not!

This makes it sound like anyone who postpones their annuity to avoid the age reduction would not get the SRS. Conversely, only those who take their annuity immediately on leaving the government can get an SRS, and they cannot be an MRA+10 retiree. Is that right? (Ignoring special cases like VERA.)

I ask because I have reached my MRA (56) with 26 years of Service and would like to know what would happen if I left the government for another job and postponed my annuity until age 60. No SRS for me then?

The regulations are very specific. To be eligible for a FERS Retiree Annuity Supplement, you must retire on an immediate annuity that is not reduced for age. Even if you elect to postpone the annuity, had you taken it originally, it would have been reduced for age, therefore, it is one of the retirement options to which the supplement is not payable. If you retired under VERA, you could get your FERS immediately, however, the supplement would not be payable until you reached your MRA.

Gwen, yes, with those facts, as long your your MRA is age 56, you would be retiring under the Voluntary Retirement Option making you eligible for the FERS Retiree Supplement however, as you pointed out, when calculating the supplement it is only based on full years of FERS civilian service, not your military service even when the deposit for the military service was made. So your supplement will approximate 37.5% of your age 62 SSA benefit.

Gwen, for example, I retired at 56, my MRA with 32 years…. I had 10.8 military which I bought back in the beginning with NO interest (hope u did too)…….so my SRS was reduced to $685 monthly. After fed taxes and insurance every month, I only clear $1590.

I’ve heard it’s not a good idea to buy back your military time if you are retired military and receiving a monthly retirement pension for your military service if your are under FERS.

First you likely need to payout at least $10K to buy back your time. Also, if you do buyback your time, your monthly military retirement payment will cease permanently when you retire from civil service. You cannot receive two federal pensions for the same service.

One last thing – in most all cases for those FedGov civil service workers under FERS and also military retirees, you will LOSE money if you buy back your 20+ years of military service than if you just elect to keep your military retirement (NOT buy back your time) and retire from civil service in your early 60’s and get a FERS pension for just your civil service time + military pension + social security!

I agree. About the only scenario where it would make sense for a military retiree to buy back his military time to add to FERS would be if he was a relatively low rank military service member and winds up as a high GS level (13 or higher) for most of his civilian career. Otherwise, they will lose money.

First of all, everyone needs to do the math before making a decision. Do not take these blanket “I’ve heard” statements as fact for your particular situation. I am FERS, I paid the military deposit for 20 years of military service (approx. $12K), and it is a great financial boost to my eventual retirement pension payout. I know this because I did the math, filed the official documents, and paid the military deposit. If you’re a military retiree, soon after your employment with the federal government, do the math to accurately determine the cost of the military deposit required to join the years with your FERS service. Make the decision within the first three years after your military retirement date so not to pay interest, if possible. Remember, you can change your mind in later years and have this deposit refunded. You are not locked in until your FERS retirement is approved. As your years in FERS accumulate and your promotions increase, the joining of the years become more financially sound. In other words, the benefits to join get better the longer you serve.

True, when you retire from government (FERS), the two retirements are joined and the military pension ceases, but this is normal and why you decided to combine the two types of service years. This combining of pensions does not affect your military retirement benefits in any way, it just combines the pension pay out from two sources, to one. Remember, your monthly military retirement pension continues like normal until you join the service years and retire from FERS. In my situation, I retired from the military 17 years ago. I paid the military deposit to join my service years with FERS. I have received my military retirement pension every month for the past 17 years as normal and will do so until I retire from FERS in five years. For me this means 22 years of monthly military pension payments received before combined with FERS service.

In ALL cases and situations, do the math, it’s free to learn the facts so that you can make an informed decision. Enlisted retirees stand to gain a significant increase in FERS pension, especially if you serve for a full length FERS career. Officer retirees, most likely not the best financial move, but still do the math to confirm…do not assume. There are other benefits to combining the years to take under consideration (e.g. combined creditable FERS years of 30 or more allows you to retire at MRA without reduction and allows receipt of SRS too.).